BofA fires back at New York over modification violations

May 10, 2013|Reuters

By Karen Freifeld

NEW YORK, May 10 (Reuters) - Bank of America Corp has fired back at New York Attorney General Eric Schneidermanafter he threatened to sue the bank for violating the terms of a$25 billion settlement designed to end mortgage servicingabuses.

In a letter to Schneiderman, lawyers for Bank of Americasaid they were "surprised and disappointed" the attorney generalthought the bank engaged in "flagrant violations" of thetimeline to process mortgage modifications.

The lawyers also said Schneiderman cannot sue until the bankhas an opportunity to cure any alleged violations.

"Bank of America has not committed any potential violations... let alone failed to cure those potential violations,"attorneys Meyer Koplow and Theodore Mirvis, of Wachtell, LiptonRosen & Katz, wrote in the May 7 letter. Reuters obtained a copyof the letter on Friday.

Schneiderman announced on Monday that he planned to sue Bankof America and Wells Fargo & Co for violating the termsof last year's National Mortgage Settlement, which was brokeredbetween five major banks and 49 attorneys general.

Schneiderman did not say how the other three banks -JPMorgan Chase & Co, Citigroup Inc and AllyFinancial Inc - were performing.

He said Bank of America had 129 violations since October andWells Fargo had 210 and that their tardiness put homeowners atgreater risk of foreclosure.

On Friday, Wells Fargo said it was committed to abiding bythe settlement.

"We expect that a constructive pathway may still developwith the New York AG," the bank said in a statement.

Asked about the Bank of America letter, Schneiderman'sspokesman, Damien LaVera, said: "At least Bank of America willrespond to one New Yorker promptly."

LaVera said the attorney general has "the right to bring asuit against parties that violate the servicing standards andwill do so."

Schneiderman has said he would seek injunctive relief and anorder requiring the banks to comply with the settlement. Hisstatement did not say he was seeking damages or penalties.

It is unclear how far he can take his efforts because theycome outside the primary channel authorized by the settlement toaddress any potential violations. The settlement's monitor isauthorized to first work with a servicer to correct anypotential violations and sue only if the errors are not fixed.

Bank of America said that, under the terms of thesettlement, the attorney general's office has no right tocommence an enforcement action and requested that the notice ofintent be publicly withdrawn.

The bank's letter asked for evidence of any violations so itcould provide remediation to homeowners without waiting for any"adversary process."